Are Cryptocurrencies Legitimate As Currency?

Remember sometime last decade when bitcoin was new? It’s true the beginning of bitcoin feels like eons ago. Today it is a wild craze and you can’t go an hour without seeing something in the news about it. Everyone has an opinion about it more than ever before, especially considering what is at stake for the opinion holder.

The battle lines were drawn from bitcoin’s inception and now the two sides are even more entrenched. Bitcoin loyalists are convinced it has lasting value. Opponents are adamant it is a terrible concept that will ultimately fail.

Here we are today, five years later, and bitcoin is stronger than ever. Just two days ago it briefly peaked at $20,000. The matter of bitcoin’s worth is far from settled but it is becoming increasingly more established as an alternative to fiat currency with each passing day. 100,000 retailers were accepting bitcoin in 2015. It’s possible that number has now doubled.

Public Statements about Bitcoin

Some earlier influencers in the business world had opinions about bitcoin. Richard Branson did in 2014. So did Elon Musk and Bill Gates. Since that time there has been a growing number of economic and financial leaders who have made public statements that are in strong support of or extreme opposition to bitcoin.

What makes for interesting analysis is not what public figures have said in support or opposition to bitcoin but what some of these same officials have said generally about cryptocurrency. Many of those who have expressed a negative view about bitcoin have made positive statements about cryptocurrency.

John McAfee famously stated recently he would eat his own man bits on national television if one bitcoin wasn’t worth $500,000 within the next three years. He has since doubled down on this statement in various tweets. He is also a very outspoken advocate of other cryptocurrencies.

Jamie Dimon, on the other hand, spoke about bitcoin at a Institute of International Finance forum in October and said buyers are stupid for purchasing bitcoins. Interestingly, he strongly differentiated the difference between his opinions about non-fiat currencies like bitcoin and cryptocurrencies generally (Dimon advocates dollar cryptocurrencies.)

In the same speech to the IFF Dimon also said, “God bless blockchain…cryptocurrencies and digital currencies are also fine,” adding to this statement that JP Morgan moves $6 trillion dollars a day around the globe with digital dollars.

Dimon’s statements about cryptocurrencies are short but to the point. He clearly does not like bitcoin and doesn’t like discussing it at length. What he says is interesting and noteworthy for cautious investors. His comments are considered by many to be ignorant and but are not too far off from comments made by other investors such as Warren Buffett and Mark Cuban. Bitcoin is a bubble that will burst someday. It’s okay to invest a little in it but don’t invest your life savings.

Dollar Cryptocurrencies

Dimon believes in blockchain technology and likes cryptocurrencies that are attached to fiat currencies. He thinks a . Other investments like gold are also different to the extent they are attached to something tangible with inherent value.

An important point that Dimon mentioned in the three-minute statement was the use of cryptocurrencies by central banks. Bringing up Japan specifically, Dimon cleared up the misconception about how cryptocurrency is used in the country. Unlike bitcoin, J-coin will be pegged to the yen.

Some of what Dimon said has been disputed by bitcoin advocates, however, it is clear he was spot on about one thing – bitcoin is a great currency for places like Venezuela. Investors there are using bitcoin to buy food, medicine and other critical goods as the Venezuelan bolivar plummets in value. To make matters worse, officials are now forcing bitcoin miners to register with the government.

The Future of Bitcoin

Perhaps the statements by Dimon and McAfee will turn out to be true. Each bitcoin could potentially be worth $500,000 at some point in the future. It may also be true the value will drop considerably, maybe even to zero. Doubtful, but possible.

Now, the Winklevoss twins are challenging Jaime Dimon to put his money where his mouth is and short bitcoin futures. Buckle up, folks. This could be interesting.